4th Railway Package - Overview

4th Railway Package - Overview

Friday, 30 December 2016

This section groups together CER’s Position Papers concerning the Fourth Railway Package adopted by the Commission in January 2013. The Papers cover the topics of domestic passenger market opening, structural models for the rail sector, and the future role of the European Rail Agency (ERA).

The Fourth Railway Package undoubtedly represents one of the major achievements of the last ten years of rail-related legislative production.

Partly born on the still warm ashes of the Recast of the First Railway Package, the European Commission’s aim with the Fourth Railway Package was not only to provide more independent infrastructure managers. Well beyond that, the target of the Commission was to make concrete steps towards the establishment of a Single European Railway Area, with the completion of rail market opening and with a heavy revision of the Interoperability and Safety Directives and of the Regulation establishing the European Rail Agency.

The so-called Market Pillar revised Directive 2012/34/EU establishing a single European railway area and Regulation (EC) 1370/2007 on public passenger transport services by rail and by road. The efforts made on the former text led to strengthening the criteria for the financial and managerial independence of the rail infrastructure managers, without at the same time disrupting the widely used governance models currently in place. The infrastructure manager is today even more than yesterday at the centre of each Member State’s railway system, equally close to all infrastructure users. Also, the revision of the Directive took care of adapting the wording of all articles pertinent to market opening, by stating with clear words that domestic rail passenger markets will have to be opened to competition, and that, at the same time, the entrance of new operators will not be to the detriment of all the operators that serve regional markets via public service contracts.

Of course it has also been up to the legislators to define, via the revision of Regulation (EC) 1370/2007, the way in which the principle of market opening would also apply to Public Service Contracts. In this regard, the legislators arrived at a text that on the one hand establishes competitive tendering as the general rule and that, on the other hand, provides a wide range of options for all Competent Authorities to proceed via direct negotiations with any given operator.

It is the sector’s shared view that the Technical Pillar (revising Directive 2008/57/EC on the interoperability of the rail system within the Community, Directive 2004/49/EC on safety on the Community’s railways, and Regulation (EC) 1335/2008 establishing a European Railway Agency), will be the most revolutionary part of the Fourth Railway Package. It fundamentally streamlines the processes of vehicle authorisation and safety certification by giving the Agency a central role and making these processes more efficient, less costly, quicker and less subject to national interests.

The Market Pillar was published in the Official Journal (OJEU L352) on 23 December 2016.

The Governance Directive 2016/2370 entered into force the day after. Member States must transpose the Directive into national legislation by the end of 2018.

Regarding the PSO Regulation 2016/2338, the EP and Council agreed on the need to have a transition period after the entry into force of the new Regulation, during which the direct award of contracts should still be possible under the rules of current Article 5(6). After that, the new rules (Article 5(4a), i.e. direct award with efficiency criteria built into the contract) will kick in. Article 5(6) will cease to apply and Article 5(4a) will be switched on as of 6 years after the entry into force of the Regulation. The Regulation will enter into force on 23 December 2017, so that the passage between Article 5(6) and Article 5(4a) will foreseeably take place in 2023.

The Market Pillar (de facto the only Directive of the Market Pillar, i.e. the revised version of Directive 2012/34/EU) will have to be further developed through one compulsory Implementing Act and two optional ones:

1. The implementing act the Commission must elaborate before 16 December 2018 to define how the Regulatory Body will run the economic equilibrium test on existing PSO and how it will apply the entire Article 11.

2. The implementing act the Commission may elaborate to define the practicalities of the application of the external reciprocity clause.

3. The implementing act the Commission may elaborate to define practices for cooperation between regulatory bodies.

It is the sector’s generally shared hope that after the achievement of this most important of milestones, all players will be able to adapt to the new legislative framework, to count on its stability and therefore build long-term investment and business strategies.